Union Budget 2023 : Finance Minister Nirmala Sitharaman has been kind to the new income tax regime in the Union Budget 2023 . He has made many announcements to make it attractive. However, this was already being expected.
Now it is clear that the focus of the government will be on the new regime of income tax. You should not be surprised if the government announces the closure of the old regime in the next few years. Apart from increasing the exemption limit, the Finance Minister has reduced the number of slabs. Income tax rates have been reduced. Not only this, he has also announced standard deduction for the people working in the new regime.
The Finance Minister has said that salaried people whose annual income is Rs 15.5 lakh or more will get a standard deduction of Rs 52,500 annually under the new tax regime. Earlier, no standard deduction was available in the new tax regime. Only people employed in the old tax regime get the benefit of standard deduction. It is Rs 50,000 per annum.
The standard deduction was introduced by the government in the Union Budget 2018. However, the transport allowance and medical reimbursement were withdrawn by the government instead. Till the financial year 2017-18, a taxpayer could claim Rs 19,200 as transport allowance.
He could also claim medical reimbursement of Rs 15,000 annually. For this, the working people had to submit the medical bill to the finance department of the company. Earlier the standard deduction was only Rs 40,000. Then in the interim budget 2019, it was increased to Rs 50,000. The concept of standard deduction is not new. The government used to give this deduction to the salaried class in the financial year 2004-05. Then it was scrapped.
On February 1, Finance Minister Nirmala Sitharaman has announced to give the benefit of standard deduction in the new income tax regime. Its purpose is to attract taxpayers towards the new tax regime. The government wants more and more taxpayers to use the new tax system instead of the old tax system. That is why the Finance Minister has said that now the new tax regime will be the default tax regime.
